China Market Lookahead: Stocks in Holding Pattern

Cheng Lei|Reporter, CNBC Asia Pacific

Published 2:54 PM ET Sun, 22 July 2012
CNBC.com

The Chinese market is likely to hover around six-month lows barring major policy announcements. The Shanghai Composite is down five weeks in a row, closing 0.74 percent lower on Friday at 2168.64—weekly losses stand at 0.79 percent. Worth noting is that the property-heavy Shenzhen market lost 4.69 percent last week.

Market Factors

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China

The all-important mid-year economic work conference is still yet to be held, so punters may still hope the meeting will bring stimulus policies. The meeting usually occurs from middle to end of July.

China has detailed the 20 major projects it wants to focus on as part of the twelfth five-year plan for seven strategic new industries, such as Broadband China, New Flat Panel Displays. While the plans have been known for some time, the details of the projects will give investors some clarity into which specific areas will benefit the most.

China's securities regulators will announce reductions to stock trading fees by around 20 percent by September. The move is expected to benefit investors directly, unlike recent moves to reduce transaction costs, which have helped brokerages and listed companies.

China's taxation administration has collated its 33 preferential tax policies for private investment into certain sectors and urged local tax authorities to implement them, in a show of the government's determination to boost private investment.

Stocks to Watch

AVIATION, INFRASTRUCTURE

China's civil aviation administration, state planning agency and ministry of finance have outlined how China will support the aviation industry, in follow-up to the cabinet document out two weeks ago. China recently approved the construction of around 20 new airports. Officials say some existing airports are in the red because there aren't enough airports in total to form an efficient network.